NWC Guidelines 2012/2013: Bosses okay higher pay but not built-in raise

They fear mandatory pay hikes will saddle them with high fixed costs

By Alvin Foo and Melissa Tan, The Straits Times, 25 May 2012

BOSSES are willing to raise wages of low-income workers to stay competitive in the tight labour market but maintain that built-in pay increases may be too costly a burden.

They believe the National Wages Council's (NWC) call for mandatory pay rises will lock them into untenable commitments.

Mr Kenneth Loo, general manager of Straits Construction, said: 'When we tender for a job today, it's for something that's in two years. We don't know what changes will come so it's pretty risky for us.'

He said that while he was willing to raise wages, part of the increment was likely to go to a variable component and the allocation would have to be determined after considering the full impact.

The NWC recommended on Wednesday that companies grant low-income workers a built-in wage rise in the form of a dollar quantum and a percentage wage increase to cushion them against rising inflation and costs. It said those earning a basic monthly salary of up to $1,000 should get a built-in increase of at least $50.

But bosses told The Straits Times that the manpower crunch would force them to raise salaries anyway.

In fact, a 5 per cent increase to keep up with inflation was unlikely to be enough to retain staff, noted Mr Vincent Tan, managing director of restaurant operator Select Group.

He said salaries would have to be raised by 'easily 10 to 15 per cent'. However, firms want to have the flexibility to manage rising business costs and they do not want to be saddled with high fixed costs.

Mr Thomas Chua, managing director of printing and packaging firm Teckwah Industrial Corp, said he would 'definitely' consider increasing pay, noting that Teckwah gave $300 to all its staff at the operative and executive levels last year to help them cope with inflation.

But he cautioned that this increment would have to be one-off rather than built in.

Economists said the NWC's recommendations could enlarge the local labour force, boost productivity and tackle the growing income gap.

CIMB economist Song Seng Wun said the NWC move was a recognition that wages at the lower end had been suppressed and that growing income inequality needed to be addressed.

He noted that the wage component as a percentage of gross domestic product had declined to about 42 to 45 per cent, well below the 55 per cent level seen in typically developed economies.

He added: 'The recommended rise will make it more attractive for part-timers or the elderly to enter the workforce across the board, especially in the services sector.'

The NWC's recommendations could complement Singapore's economic restructuring and improve productivity as employers would expect their workers to up their game in the light of the salary increases.

OCBC Bank economist Selena Ling said: 'Employers will expect workers to be at least 5 per cent more productive to cover the increment.'

Mr Song added: 'In the long term, this will encourage companies to boost operational efficiency and look at expanding output without adding more workers.'

FairPrice first to increase staff salaries
By Jessica Lim, The Straits Times, 25 May 2012

NTUC FairPrice yesterday became the first employer to announce it was increasing salaries, two days after the move was recommended by the National Wages Council.

Almost all of the supermarket chain's 4,000 full-time non-executive staff will get a pay rise of up to 15.8 per cent from July. They include workers such as retail assistants and cashiers.

The biggest winners will be the roughly 700 employees who earn a base salary of less than $1,000 a month.

These employees will receive about $140 extra per month, almost three times the recommended amount.

The 107-branch cooperative chain will also be giving staff a one-off bonus for the third year in a row.

On Wednesday, the council recommended that companies give employees earning a basic monthly salary of $1,000 or less at least $50 more per month. It also asked employers to consider giving them an additional one-off lump sum, to help them cope with the cost of living.

The recommendations, which were accepted by the Government, also included an overall increase in basic pay for low-wage workers in general. However, no specific sum was mentioned.

The adjustments will raise NTUC FairPrice's manpower costs by more than $10 million per year.

Its chief executive, Mr Seah Kian Peng, said the pay rise was the 'biggest in recent memory' and part of the chain's annual wage review.

'It's really to help everyone cope with the rising cost of living,' he added. 'Our staff say that rising costs add up for things like transport, food, utility bills.'

'Extend pay hike to non-union workers'
NWC proposal of $50 rise timely and necessary, says Halimah Yacob
By Sarah Giam, The Straits Times, 26 May 2012

THE new recommendations by the National Wages Council (NWC) for low-wage workers should be implemented not just by unionised companies, but non-unionised ones too, Minister of State for Community Development, Youth and Sports Halimah Yacob said yesterday.

She said the NWC's proposal to give workers earning under $1,000 a permanent pay increase of at least $50 this year was 'timely and necessary'; the percentage increase may not be significant for someone in that income bracket, but the dollar quantum would be, she added.

She was speaking to reporters at the National Family Celebrations (NFC) held at Suntec City Convention Centre and featuring musical and dance performances and a family game show for parent-child pairs.

The NWC's recommendation on Thursday marked the first time since 1984 that it had proposed a minimum quantum of pay increase for workers.

Asked whether $50 was enough, especially for larger families, Madam Halimah said: 'Frankly speaking, no dollar quantum is sufficient when we talk about low-income families.'

She added, however, that it was a starting point.

On whether the pay hike could cushion low-income families against last month's inflation rate of 5.4 per cent, she replied that it ought to be seen in the context of the rest of the measures to help this group, such as the Workfare Income Supplement, GST vouchers, utility rebates and other forms of aid.

She also said the pay hike should not be a one-off affair, but a yearly one.

Then, with one eye on employers who would have to shoulder a larger wage bill, she suggested that the wage increase not be implemented overnight.

'Some companies might say they cannot carry the burden, and will likely retrench their workers - the very ones we want to take care of,' she said.

So wages should be increased 'in a sustainable manner', with more going to the basic wage for low-income workers, Madam Halimah said.

More than 3,000 tertiary students were at the NFC, which has been held annually since 1985.

They viewed screenshots of Deputy Prime Minister Tharman Shanmugaratnam's personal tips on family issues, which he shared in response to questions from youth.

 

National University of Singapore student Soh Yi Da, 23, said the tips were insightful, and gave a glimpse into his life.

Mr Tharman's responses can be viewed on the NFC's Family First! Facebook page.

HP to axe 27,000 jobs worldwide
A third of layoffs will be in the US; no word yet, say staff in Singapore
Reuters, New York Times, The Straits Times, 25 May 2012

SAN FRANCISCO - Hewlett-Packard (HP) plans to lay off roughly 27,000 employees over the next couple of years - a third of them in the United States - to jump-start growth and save up to US$3.5 billion (S$4.5 billion) annually.

HP employees in Singapore are waiting to hear how they will be affected by the massive job cuts.

The company said the layoffs, which represent nearly 8 per cent of its workforce, would be made mainly through early retirement. They would generate annual savings of up to US$3.5 billion by the end of fiscal year 2014, when the layoffs are expected to be completed.

HP shares soared 8.2 per cent on the news on Wednesday.

The world's No. 1 personal computer maker, which employs 349,600 people globally, also said on Wednesday it had a 31 per cent decline in second-quarter profit and a 3 per cent decline in revenue, compared with a year ago.

The results, however, were better than Wall Street expectations.

Layoffs 'adversely impact people's lives, but in this case, they are absolutely critical to the long-term health of the company', chief executive Meg Whitman said in an interview. 'This is broad-based. By design, it will touch all of HP.'

She said a third of the layoffs would be in the United States.
The company has not said which other countries will be affected.

An HP spokesman in Singapore said: 'We have not yet announced specific plans with regard to specific locations.

'We do expect the workforce reduction to impact just about every business and region. Beyond this, we unfortunately don't have any additional information to share at the moment.'

At HP's corporate headquarters at Alexandra Road yesterday, there were no signs of retrenchment activity.

Employees said they had heard talk about the job cuts or from news reports but had not been given any details from their bosses yet.

Ms Whitman, a veteran Silicon Valley executive who took the top job last September, has been trying to turn the company around.

HP's Asia-Pacific (Apac) division is mostly run out of Singapore, and contributes about a fifth of the US$25 billion turnover.

Some people believe that Asia will not be affected that much, because it is still a growth story. But instead of the 27,000 layoffs announced, they think the actual number will be closer to 30,000.

HP people expect much of the cutting to come in the so-called Enterprise Division. Four years ago, HP bought the company EDS, which does outsourcing and software services.

The division has been performing poorly. They expect half the division to be axed; thus people in the Enterprise Division, including those in Singapore/Apac, may be the most under threat.